AIB paid 'rogue trader' bonuses

Monday 11 February 2002 00:00 BST

THE US currency trader suspected of defrauding Allied Irish Banks of around £530m received hefty bonuses for his dealings, it has emerged. The bank has also frozen the bonuses for its directors and senior management pending the outcome of an investigation into the alleged fraud.

The Baltimore Sun newspaper said the trader, John Rusnak, earned 'six figure' bonuses netting him as much as $200,000 (£130,000), on top of his $85,000 annual salary.

The bonuses might have provided the motivation for the false trading, the paper quoted banking sources saying. AIB confirmed Rusnak, a trader at its Allfirst Financial unit, had received bonuses but said he was more likely to have 'earned' between $100,000 and $200,000.

Bonuses normally represent a large part of the executive remuneration package. The top five AIB bosses received a total of e1.26m (£780,000) in bonuses - equivalent to about 50% of their combined salaries - in 2000. The latest bonuses were due to be paid last week.

AIB said at the weekend that it had appointed Eugene Ludwig, a former comptroller of the US Currency and a managing partner of Washington-based Promontory Financial Group, to take charge of the probe. AIB alleges that Rusnak lost $750m in fraudulent currency deals, after betting the wrong way on dollar/yen movements. His attorneys deny he stole the money.

The substantial losses have stunned markets, hammering AIB's stock and raising concerns about the bank's management. AIB chief executive Michael Buckley sought to dispel concerns about management at the weekend. In a radio interview, he said proper security had been in place but that Rusnak had found ways around it.

'This was fraud - there is no question about that. He (Rusnak) set out diligently, deliberately and deviously to get around the controls that existed and took construct bogus contracts,' Buckley said.